Board of Trustees of the Glazing Health and Welfare Trust v. Chambers, No. 16-15588 (9th Cir. 2018)
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Nevada Senate Bill 223, which limits damages that can be collected from general contractors and imposed notification requirements on contractors and welfare benefit plans, was a legitimate exercise of Nevada's traditional state authority and was not preempted by the Employee Retirement Income Security Act (ERISA).
The Ninth Circuit vacated the district court's grant of summary judgment to plaintiffs. Determining that the appeal was not moot, the panel held that SB 223 was not preempted because it did not intrude on any federally regulated field, conflict with ERISA's objectives, or otherwise impermissibly relate to ERISA plans. Rather, SB 223 targeted an area of traditional state concern—debt collection—and pared back a state-conferred entitlement to collect unpaid debts from third-party general contractors. Therefore, SB 223 was a legitimate exercise of Nevada's traditional state authority.
Court Description: ERISA Preemption / Mootness Vacating the district court’s summary judgment in favor of the plaintiffs, the panel held that Nevada Senate Bill 223 was a legitimate exercise of Nevada’s traditional state authority and was not preempted by the Employee Retirement Income Security Act. Nevada law holds general contractors vicariously liable for the labor debts owed by subcontractors to subcontractors’ employees on construction projects. SB 223 limited the damages that can be collected from general contractors and imposed notification requirements on contractors and welfare benefit plans regulated under ERISA before an action could be brought under Nevada law against general contractors. Plaintiffs, ERISA trusts that managed ERISA plans, claimed that SB 223 was preempted by ERISA because it impermissibly “related to” ERISA plans. The panel concluded that the appeal was not moot following the Nevada legislature’s repeal of SB 223 and enactment of SB 338, a replacement that repeats some of the challenged aspects of SB 223. The panel held that legislative change in response to an adverse judicial ruling is generally the type of “voluntary cessation” that defeats mootness on appeal. The panel concluded that Nevada did not rebut a presumption that its appeal was not moot because it did not
The court issued a subsequent related opinion or order on May 22, 2019.
The court issued a subsequent related opinion or order on November 7, 2019.
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